At Lean Startup Week, in November, 2017, Dr. Tendayi Viki spoke about how intrapreneurs can increase their chances of succeeding by aligning their work to the corporate strategy.
Many big companies bring in Lean Startup workshops for innovation staff because they’ve heard good things about it, Tendayi explained. Yet, he’s found, no matter how excited or open a corporation is, these trainings alone are not enough to integrate the methods within a big company.
In fact, often after a Lean Startup training, he finds those employees can’t always just hit the ground running because the methodology for doing lean innovation is different from the way that large companies work.
“You have to test for feasibility, desirability and viability before you scale,” Tendayi explained. “This rhythm of build-measure-learn is slightly different from the way that large organizations operate.”
Correct rhythm misalignment
On the road to getting that alignment, one of the first big challenges that large companies have in integrating Lean Startup begins with what he calls “rhythm misalignment,” which is when the way an entrepreneur ought to operate clashes with the way large companies invest in projects.
Large companies are loathe to invest in anything until know what the return on investment (ROI) is, Tendayi said. “So you have innovators trying to run experiments…and large companies want you to tell them what the business model is before they release funding to you.”
In order to align a “rhythm of making investment decisions” to the “rhythm of innovators” he recommends you launch into a “build-measure-learn loop for investing money.”
This means: You invest a little bit, you track progress, and you review what the team is making. Only then do you judge: “Are [you] close to product-market fit?” If you are, you double-down, and if not, you exit. “This is how you align investment decision-making to the rhythm of how innovators are supposed to work.”
Connect your innovation strategy with your business strategy
The next challenge for innovators attempting to integrate Lean Startup in a big company is what Tendayi called “the problem of success.”
You’ve made something cool, you’ve got customers, and now you’re looking for resources to scale what you’ve done. But when you take it to your company to get these resources “nobody wants to give [them] to you,” he said.
This problem often occurs because innovators’ priorities are rarely “on anybody’s strategic plan.” More often, he sees large companies treating their innovation lab as an afterthought, hoping “something cool comes out of it, but we don’t really know what’s going to happen with it once it’s successful because nobody has actually thought that far.”
He cited a Price Waterhouse Cooper study that reports nearly 70% of all companies struggle with connecting their innovation strategy with their overall business strategy. “So those random acts of innovation are much more likely to fail.”
Take a point of view
Thus, Tendayi recommends a “build-measure-learn loop for strategy making.” The first step in this, before a single dollar is invested in innovation, Tendayi encouraged, is to “take a point of view about where the world is going”—that is, follow the trends that are going to impact the business, and cast into the future for things a company might need to respond to. “What products in our portfolio are declining that we need to fix?”
After you take a point of view about the trends and the problems, he then recommended you take a point of view about “how we’re going to use innovation to respond.” He called this “the innovation thesis,” which is based on the venture capital notion that you can’t invest in everything, so you have to make a decision about the kind of things you do invest in, and the kind of things you don’t.
“So the investment decisions that we make into these startup teams become experiments on our innovation strategy.” In essence, the startup teams are running experiments on their business models, but the investors and leaders use those startups as experiments on their innovation strategy.
From there, Tendayi suggested you review how successful these strategies are, and then, on a quarterly or biannual basis, get together and review the portfolio to iterate the thesis, or just keep scaling it.
Tendayi then shared an example of a tool called a “product council” that comes from a Pearson, a FTSE 100 global education company.
Set up a product and portfolio council
“The product council makes investment decisions on specific innovation projects as they move along their product life cycle,” Tendayi explains. They make decisions about whether customer needs have been validated as well as solutions and make the investment decisions.
But in addition, he said they’ve set up a “portfolio council” whose role it is to make decisions about strategy as well as allocations and investments to particular strategic initiatives based on the analysis of the portfolio.
“The first thing we do is analyze the portfolio, map the portfolio and see what products we have, what’s happening and what’s struggling,” Tendayi said.
Next they map out the overall landscape: who are the competitors, how are things changing, what are the key trends, etc. “On the basis of all of that we can start to develop a general vision about what kinds of things we want to invest in.”
They set specific goals about business metrics they want to accomplish such as what the portfolio makeup will look like, what percent will be digital, what percent will be analog, what percent will be in the market and so on.
“Once you’ve done that, Tendayi said, you want to look at your portfolio and see “What are the gaps and opportunities?” From there investment themes should start to emerge.
“We’re going to invest in these things to plug the gaps. And we’re going to invest in these things to explore the opportunities.”
From there it becomes easier for a company to allocate resources because there is now a strategic innovation plan.
The fundamental philosophy that underlies this budgeting and resource allocation plan, Tendayi suggested, is “Not a single dollar moves from the company’s bank account into some project except when it’s a specific expression of our strategic intentions.”
Don’t forget tracking and reporting
After a company has finally decided what to invest in, Tendayi encourages using “innovation accounting metrics” to track whether or not the customer opportunity you thought was there, and the customer jobs, are real.
If all of these strategies are working right, he says you’ll know it because your innovation team “is not having to hustle or run a guerrilla movement and try to hide and protect their ideas.”
The end result can be an “innovative ecosystem” and an end-to-end process for managing innovation within a large organization.
Thank you to Jordan Rosenfeld for contributing this piece. If you seek to bring the entrepreneurial spirit to your organization, Lean Startup Company can help. We offer live and virtual training, coaching and consulting to empower people and companies to solve their own problems using entrepreneurial management, no matter their industry, size company, or sector of the economy. Email us.